Regarding ITC, what I have observed that market has been very very efficient in valuing this company based on macros as well as performance of its each business unit.
For Cigarettes division, the scope for tax increase always remain as India is still below recommended WHO limit of 75% tax. India is somewhere near 57%, if I am not wrong.
For FMCG, even Adani is low margin FMCG company and is in existence since many years – since Jan 1999. Tatas also used to be low margin and still lower than top notch FMCG players. Tata Consumer has been constantly increasing margins. This gap is an interesting gap to be filled. Same opportunity lies in ITC imo. Efforts seem to be in right direction. Inflation eats margin and their investments proved that inflation did not reduce the already lower margins even further. This is a positive and increases my conviction on long term performance of this division.
Hotels – Again Tatas are hugely positive on their Hotels business. I was listening to someone from Royal Orchid management (ex IIM A) and he was hugely positive for hotels for next 2-3 years. ITC not being in rush to sell/demerge it in bottom of 2020 inspite of tremendous pressure from investor community etc. again increases my conviction on this division.
Agri – I dont know much about this piece. Someone explained echoupal beutifully in this thread earlier and I think they are good at this division.
IT – Again a piece not know much details or progress on. Can be a dark horse piece going forward.
Even L&T has no owners. They gave a new life to their group via technology. LTIMindtree today is among top 5 tech firm in India. LTTS is niche tech.
Not sure about future of ITC and its each division but have seen only but positive developments since last 2-3 years I have been tracking and owning its shares.
Would be great to know the magnitude of Tax risks & Agri policy risks going ahead as I think that is a real threat to valuations than anything else at the moment.
Disc: Invested & highly biased. Tata Consumer & ITC are my top 2 holdings. Holding both from much lower levels. Not a buy/Sell recommendation and not eligible for any advice. I can be completely wrong in all my assessments.
| Subscribe To Our Free Newsletter |
